Inventory is at a record low, prices are high, interest rates are incredible and millennials have found themselves frustrated as they’ve entered a very challenging market as first time home buyers.
A survey from Bankrate found that ⅔ of millennials are voicing regret from their recent home purchase. They have felt the pressure of going above asking price, paying out of pocket for appraisal discrepancies, getting outbid over and over and getting desperate and basically choosing a home that somewhat matches what they really wanted, but definitely feeling they had to compromise.
At least for now, these new homeowners can feel good about something. With inventory continuing to stay low and new construction years behind, all studies and forecasts are showing that they’ll have equity in their home since prices are expected to continue rising in the near term according to Chief Economist of the National Association of Realtors. So if they choose to turn around and sell quickly, this is one of the few times they may even see a profit in such a short timeframe.
Avoid Buyer’s Remorse Altogether.
More importantly, though, is helping these buyers avoid remorse altogether. One of the things we’ve advised these first time homebuyers is to wait and save so they have more buying power and avoid compromising on something they can’t see themselves living in for 7-10 years, which is the average timespan that homeowners are living in their homes.
It’s important for buyers to understand what bidding wars look like in advance, what to expect and have a number they’re willing to spend on a home before submitting an offer so they know how high they’re willing to go using an escalation clause. If they lose the offer because it went higher than that, then they are ok with that. This all goes with having the mental preparation to get in the game.
We definitely experienced buyer fatigue this summer. Buyer’s were sick and tired of submitting multiple offers and seeing overpriced homes slip away from them time after time.
Here’s what needs to happen.
It’s important to look at trends. What homes are in markets that will show longevity and equity in the long run even if there is a dip in the market? If you look ahead, then consider the price you pay today versus where that exact home will be in a decade. We have to teach our clients not to look at the market today when they purchase, but rather how much it will be worth in the future. If it’s overvalued and needs more work and money than they’re willing to put into it, it’s time to move on.
It’s all about counting the cost. is it worth the price now and the renovations it may need versus where the home and market will be when they’re ready to sell?
At Waypointe, we discuss this with our clients so they have a better understanding of expectations upfront to help avoid or reduce the risk of buyer’s remorse.
If you have questions about the market or are ready to buy or sell, call us at 407.801.9914.
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